City of Edgerton v. General Cas. Co. of Wisconsin

Decision Date16 June 1994
Docket NumberNo. 91-1408,91-1408
Citation184 Wis.2d 750,517 N.W.2d 463
Parties, 38 ERC 2039, 48 A.L.R.5th 803 CITY OF EDGERTON and Edgerton Sand & Gravel, Inc., Plaintiffs-Respondents, d v. GENERAL CASUALTY COMPANY OF WISCONSIN, Defendant-Appellant-Petitioner, Wisconsin Insurance Security Fund, Defendant, Aetna Casualty and Surety Company, Defendant-Co-Appellant-Petitioner, Hanover Insurance Companies, Wausau Insurance Companies and Local Government Property Insurance Fund, Defendants.
CourtWisconsin Supreme Court

For the plaintiffs-respondents there was a brief by James A. Olson, Steven J. Schooler and Lawton & Cates, S.C., Madison and oral argument by Steven J. Schooler.

Amicus curiae brief was filed by Paul R. Gurtler, Dunn County Corp. Counsel, Menomonie, for WI Ass'n of County Corp. Counsels.

Amicus curiae brief was filed by Robert C. Burrell and Borgelt, Powell, Peterson & Frauen, S.C., Milwaukee, and of counsel Thomas W. Brunner, Laura A. Foggan, Marilyn E. Kerst, John C. Yang and Wiley, Rein & Fielding, Washington, DC, for Ins. Environmental Litigation Ass'n.

Amicus curiae brief was filed by Eric Englund, Madison, for WI Ins. Alliance.

Amicus curiae brief was filed by Joseph J. Muratore, Jr. and Law Offices of Joseph J. Muratore, S.C., Racine and of counsel Thomas J. Dawson and WI Public Intervenor, Madison and Eugene R. Anderson, Robert M. Horkovich, Telma M. Grayson and Anderson, Kill, Olick & Oshinksy, P.C., New York City, for WI Public Intervenor, Wisconsin's Environmental Decade, Samuels Recycling Co., Western Pub. Co., Inc., and S.C. Johnson & Son, Inc.

Amicus curiae brief was filed by Thomas C. Ewing, Douglas B. Clark, Mark D. Kunkel and Foley & Lardner, Madison, for WI Policyholders Ass'n.

Amicus curiae brief was filed by Steven E. Tinker, Asst. Atty. Gen., with whom on the brief was James E. Doyle, Atty. Gen., for State of WI.

Amicus curiae brief was filed by Curtis A. Witnyski, Legal Counsel, Madison, for League of WI Municipalities.

Amicus curiae brief was filed by David V. Meany and Michael, Best & Friedrich, Milwaukee and of counsel David M. Jones, John M. Edwards and Kirkpatrick & Lockhart, Boston, MA, for Nat. Ass'n of Chemical Recyclers, WI Fabricare Institute, Inc., Petroleum Marketers Ass'n of WI, Ass'n of Environmentally Responsible Businesses and WI Auto and Truck Dealers Ass'n.

Amicus curiae brief was filed by Mark A. Dotson and Quarles & Brady, Milwaukee, and Russell H. Carpenter, Jr., Saul B. Goodman, William F. Greaney, Adam M. Cole and Covington & Burling, Washington, DC, for The American Petroleum Institute, The American Fiber Mfrs. Ass'n and The Chemical Mfrs. Ass'n.

GESKE, Justice.

This is a review of a published decision of the court of appeals, City of Edgerton v. General Cas. Co., 172 Wis.2d 518, 493 N.W.2d 768 (Ct.App.1992), which affirmed in part and reversed in part a judgment of the circuit court for Rock County, John H. Lussow, Circuit Judge. The circuit court granted summary judgment to the plaintiffs, City of Edgerton (the City) and Edgerton Sand and Gravel, Inc. (ES & G). The City and ES & G sought a declaration of their rights under insurance policies issued by General Casualty Company of Wisconsin (General Casualty) and Aetna Casualty and Surety Company (Aetna). 1 The City and ES & G claimed that the policies provided coverage for environmental remediation costs resulting from the operation of a landfill located in the City. The circuit court agreed and granted the motion for summary judgment. The court of appeals reversed that decision.

General Casualty and Aetna filed cross-motions for summary judgment in the circuit court, claiming that (a) no suit seeking damages had been filed which would trigger a duty to defend, and (b) the failure of ES & G to provide notice of an occurrence or claim precluded coverage. The circuit court denied the cross-motions, and the court of appeals affirmed.

We now affirm the court of appeals decision with regard to the City's and ES & G's motion for summary judgment and reverse the court of appeals decision with regard to General Casualty's and Aetna's cross-motions for summary judgment.

Of paramount concern in this case is whether the insurance policies for which ES & G and the City contracted require a duty to defend against federal and state agencies' demands for environmental cleanup. Consequently, the following issues of first impression are before the court:

(1) Does the receipt of certain letters from a governmental agency requesting voluntary participation in environmental cleanup efforts constitute a "suit seeking damages" sufficient to trigger an insurance company's duty to defend?

(2) Do cleanup and remediation costs under CERCLA 2 and equivalent state statutes 3 constitute "damages" within the context of a comprehensive liability insurance policy?

(3) Do the personal injury provisions of an insurance policy provide coverage for environmental cleanup costs when there has been no allegation of wrongful entry, eviction, or other invasion of the right to private occupancy?

(4) Is the "insured's own property" exclusion applicable so as to preclude coverage for cleanup and response costs incurred to remediate the insured's own property?

The threshold question in this case is whether the receipt by ES & G and the City of letters by the Wisconsin Department of Natural Resources (DNR), requesting remediation of a contaminated site, triggered General Casualty's and Aetna's duty to defend the City and ES & G as their insureds. The court of appeals concluded that the duty to defend arose when a federal or state environmental agency identified a potentially responsible party (PRP) 4 which it unequivocally required to pay the cost of, or participate in paying the cost of, landfill remediation. Edgerton, 172 Wis.2d at 530, 493 N.W.2d 768. However, the duty to defend is not triggered unless the suit seeks damages. Id. (citing Shorewood School Dist. v. Wausau Ins., 170 Wis.2d 347, 366, 488 N.W.2d 82 (1992)). Damages, according to the court of appeals, are remedial in nature, not preventive, and therefore do not encompass the cost of complying with an injunctive decree. See Shorewood School Dist., 170 Wis.2d at 370, 488 N.W.2d 82. Though General Casualty and Aetna argued that Superfund remediation and cleanup costs were incurred in response to claims for injunctive relief, the court of appeals concluded that the manner in which the term "damages" was used in the insurance policies at issue contemplated costs incurred when responding to the Superfund initiative.

We now hold that the DNR's notification to ES & G and the City by letter that ES & G and the City were potentially responsible parties and liable for hazardous waste site remediation costs does not trigger the insurers' duty to defend because the letters do not constitute a "suit seeking damages" within the plain meaning of the insurance policies contracted for and issued to ES & G and the City.

This holding makes it unnecessary for us to further analyze the personal injury and pollution exclusion provisions of the policies at issue.

The relevant facts are as follows. ES & G owns a landfill site in Rock County, consisting of approximately ten acres. 5 The site, located on the southern border of the City, accommodated sand and gravel operations as well as serving as the City's landfill from 1968 to 1984.

By 1978, the DNR informed ES & G by letter that it suspected groundwater contamination at the site. The DNR recommended that the landfill be closed and capped. In 1984, volatile organic compounds (VOCs) were detected in the groundwater under and in the vicinity of the site. ES & G closed the landfill on December 30, 1984, and, during the next year, the site was capped. 6 Though the site was closed, groundwater contamination remained, and the DNR recommended the landfill for placement on the EPA's list of contaminated sites for priority cleanup.

On June 22, 1989, the EPA notified ES & G and the City by certified letter 7 that the EPA was investigating the circumstances surrounding the presence of hazardous substances in and around the landfill. 8 The EPA then requested that ES & G and the City (now considered PRPs) respond to the DNR's request for information regarding the disposal of hazardous substances at the landfill from 1950 to 1984.

In July, 1989, both the City and ES & G forwarded the letters received from the EPA to their primary carrier, General Casualty. Each separately requested defense coverage. ES & G specifically requested that General Casualty pay any costs which ES & G may have incurred regarding the site.

In February, 1990, the DNR sent certified letters to the City and ES & G, giving each 30 days to propose a plan for remediation of the site and any problems associated with it. 9 Failure to respond would result in the listing of the site on CERCLA's National Priorities List (NPL), OR STATE ACTION. 10 BY april, 1990, es & g notified aetNA, ITS excess insurer, of the receipt of the EPA information request letter and the DNR enforcement letter. Again, ES & G requested coverage of defense costs as well as any liability resulting from EPA or DNR claims. General Casualty denied coverage and a defense for the City and ES & G. Aetna denied the same for ES & G.

Both the City and ES & G, in a declaratory action begun in December, 1990, sought to define the obligations of General Casualty and Aetna under the insurance policies. Specifically, both the City and ES & G claimed that General Casualty and Aetna were obligated to defend and indemnify them for any liability arising out of DNR or EPA claims, actions, or suits involving the landfill. Additionally, ES & G and the City stated a claim for bad faith against General Casualty and Aetna for refusing to provide a defense. A motion for summary judgment was filed by the City and ES & G in March, 1991. In April, 1991, General Casualty filed a cross-motion for...

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